NCPA - National Center for Policy Analysis


January 21, 2010

The United States' direction today is a dangerous one, even when compared to the country's state of affairs just one year ago, as revealed in the "2010 Index of Economic Freedom," a joint project from the Heritage Foundation and the Wall Street Journal.  The Index analyzes just how economically "free" a country is, and this year America saw a steep and significant decline, enough to make it drop altogether from the "free" category.  This is the first time in the 16 years since the index began publication that the United States dropped to "mostly free." 

What exactly is the Index?  It's a comprehensive review of 179 countries around the world that considers economic freedom in ten separate areas, according to Heritage:

  • Detailed analyses have found that citizens in countries with the highest scores on the Index enjoy much higher standards of living than their neighbors in countries that are less free.
  • Freer countries, for example, have levels of per capita gross domestic product (GDP) that are more than 10 times higher than in countries that are mostly unfree or repressed.
  • Higher levels of economic freedom also go hand-in-hand with broader indications of both economic and social well-being. 

Specifically, the Index records a wide disparity among the 20 largest economies in the world over the past year, with half continuing to increase economic freedom while the other half, including the United States and the United Kingdom, embraced policies that substantially diminished it, says Heritage: 

  • In particular, countries that undertook large stimulus measures or other government-directed attempts to spur growth failed to realize economic growth.
  • Not only have growth rates not increased, but the long term impact of these measures, which includes increased deficits, inflation, higher taxes and protectionist measures against foreign trade, actually diminish economic activity.
  • In the case of a country like the United States, which has such a large impact on the world economy, slower growth harms not only Americans, but citizens of almost every other country in the world. 

Source: Report, "Americans Call for Change as U.S. Becomes Less Economically Free," Heritage Foundation, January 20, 2010. 

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